Microsoft prices Surface tablet at $500, but is it cheap enough to beat the iPad?

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With the joint release of Windows 8 and its homegrown Surface tablet, October 26 will be the most important day in Microsoft’s life. The day will be fraught with risk: On the one hand, Microsoft could cement its transition from a maker of desktop software, to a modern, mobile- and device-oriented company — but on the other, if Windows 8 and Surface fail, Microsoft will have all but guaranteed its obsolescence and eventual subsumption by Google and Apple.

Windows 8, with its Metro interface and other questionable design decisions, is by no means a dead cert. The Metro Start screen and apps force Windows 8 users to undergo a complete paradigm shift — which is tolerable for consumers, but abhorrent for enterprises, who are not fond of having different usage patterns forced upon them. This isn’t to say that the Metro interface itself will be bad for productivity, or that it won’t work with enterprise apps, but in a world where corporate entities are still actively switching from XP and Vista to Windows 7, I don’t foresee many companies rushing to embrace the Windows 8 paradigm shift.

And then there’s the Surface tablet, which represents Microsoft’s turning point from being a software company, to a “devices and services” company. This move has been a long time coming, but it was undoubtedly hurried along by the very rapid growth of devices — non-PC computers such as smartphones and tablets. While Microsoft still has a complete monopoly on the desktop PC market, its overall share of internet-connected computers is rapidly diminishing. The Surface tablet, along with dozens of Windows 8 OEM tablets and convertibles, is Microsoft’s attempt to gain a foothold in this new market.

Since the Surface unveil in in June, Microsoft has been incredibly coy about its first-party hardware plans. We were given very few details about pricing and availability, which led us to believe that it would be very expensive. CEO Steve Ballmer said that MS would sell “a few million” tablets in the first 12 months — but given that 375 million PCs are expected to be sold in 2013, a few million would be just a drop in the ocean.

Today, we can finally spill some light on Microsoft’s true plans for the Surface. According to a Wall Street Journal report, Microsoft has placed an order for between 3 and 5 million Surface tablets in the fourth quarter of 2012. So you have some idea of the scale, this is roughly the same number of tablets that Apple sold in the iPad’s first quarter. An order of 3-5 million is around the same amount of Kindle Fire HD tablets that Amazon ordered. This isn’t penny stakes; MS is intending to shift a lot more than “a few million” tablets in the first year.

Second, and perhaps more importantly, we now know the price of the ARM-powered Surface tablet: $500 for the 32GB model without the keyboard Touch Cover, $600 for the 32GB with the Touch Cover, and $700 for the 64GB model with Touch Cover. To put this into comparison, the standard 32GB Surface is $100 cheaper than the 32GB iPad 3, and around the same price as the Asus Transformer Prime. I don’t think Microsoft is selling these tablets at a loss, but it definitely looks like its primary goal is to attack the iPad, rather than raking in fat profits.

For that $500 price tag, you get a 10.6-inch tablet that has a quad-core processor (probably Tegra 3), a full-size USB socket, SD card slot, and a micro HDMI socket. The whole thing is 9.3mm thick and weighs 676 grams (marginally fatter and thicker than the iPad) — but it does come with a built-in kickstand for table-top use. The only real downer is that the Surface tablet only has a 1366×768 display, while the iPad 3 rocks a best-in-class Retina-quality 2048×1536 display. Microsoft is probably counting on this difference not being worth $100 in the eyes of consumers — or that the kickstand and bundled version of Microsoft Office make up for it.

To ensure that Windows 8 and the Surface succeed, Microsoft has reportedly set aside no less than $1.5 billion for advertising. The first fruits of which you can see below.

In addition to these videos, Microsoft has also begun covering US cities with Surface street art:

Rest assured that these stylish, viral, and exceedingly expensive ads are just the beginning of a massive marketing blitz to convince the public that Microsoft is cool, Windows 8 is a paradigm shift worth investing in, and that the Surface is a viable alternative to the iPad. With a beachhead established, Microsoft will then proceed to push Windows Phone 8 down our throats as well, dressing it up as the perfect companion device to Windows 8 (which, in all fairness, it probably will be). For comparison, Microsoft spent $500 million on marketing Kinect — more than it spent on marketing the console itself. $1.5 billion is a monumental figure to spend on marketing.

Tagged In

These Surface tablets look interesting but questions remain: how good is that touch keyboard? What apps are available for ARM-based Windows RT? Battery life? The press has had no exposure to the devices so preordering is a real leap of faith.

Micr*soft*’s strategy is all wrong IMO. They have tried and failed at devices (aka hardware) and refuse to embrace and accept that software is where they should be. The path they are on is a slippery slope IMO. As an example, Microsoft used to be the #1 software vendor on Mac, yes Mac, with their Office product. With each release of Office for Mac, Microsoft threatens that “this is the last version for Mac.” Why squander a growing market? Due to lack of focus, many competitors have stepped in. Why has there been no Microsoft branded apps for iOS or Android? Microsoft could have dominated the business end of the mobile/tablet market but they have simply refused. Arrogance and lack of vision is the only explanation I can give.

Actually, yes. Despite the popularity of the Xbox and associated hardware, that business unit struggles to make money. Console gaming is not the place to make good margins on hardware. More outright failures would be the Zune and Kin.

Am I the only one who hears a rickroll in the first 24 seconds coming from the ‘clicks’?

luis3007

When I hear the people demanding the old desktop interface back I think to myself: What do they think MS is? Microsoft is a bussiness, as such they must make money. Since the Enterprise market is guaranteed to keep W7 for another decade what can they do to plunge back into consumer mindset. Sure, they coudl have released W8 as a W7 SP2 type of product and Metro in Surface and WP8.
That would have been a failure of epic proportions!!! Why? Because a desktop-only W8 would have continued to lose profit as desktop/laptops fall back due to Tablet sales and the Surface/WP8 wouldn’t have gained marketshare against ipad/android tablets. Since MS is fighting for long term survival, they HAVE to put the Metro interface in front of us, whatever the cost, if only to educate consumers and led them to the Surface/WP8.
If they had released W8 desktop and Surface/WP8 as separate and non-integrated products as so many people demand it would have doomed the company and in 10 years they would be absorbed by Apple/Google once the Enterprise started to fully transition to mobile computing. At least by shoving Metro down our throats MS has a chance to survive and come back in the long term, even if it irks some users in the short term.

That is why they are pushing out Surface. I am sure that, unless this is a huge hit, it will probably be the first and last tablet they do, but they would have pushed the OEM makers to do quality tablets like these. If it fails, I am sure it’s not going to be because its crap, but because of perception. If those 1.5B work… it will be a HIT that and it will make people upgrade to W8 which is where the money for them is. Whatever helps them sell windows 8 is money well spent.

xformers

I’m not sure it has to “beat” Apple, to be a success, at least not on price. I may very well be in the minority (at least here), but as someone who knows just enough “tech”, to get into trouble, all I really want is one “system to rule them all”… Or more directly put, one base system that my phone, my tablet, my laptop and my desktops can all work off of and (more importantly) all be “connected” to each other, sharing whatever information, files, etc., I want to share, between them.

Yes… I know there are various “cloud” services available, that can do much of that, but I don’t want to have a service here, for this and a service there, for that, etc., etc. They should all just talk to each other (any time they get together, or even, wherever I am) and share whatever I setup to share, or specify, at any given moment.

i.e., I’m at work… My desktop and laptop are there, connected (locally). I write an email on one, I may want it to appear (as from me) on the other… I make a calendar entry on one, it should appear on the other AND my phone, a contact added on one, is on the other, etc., etc. I get home with only my phone, whatever was on that, should update my computer at home (again, locally). If I bring my laptop home, again, everything, each way, syncs up and all devices are “equalized”… or at least as far as I have asked them to go.
I don’t care if it is Apple, Microsoft, Google, or whomever… that does it.

Again… I am sure there are ways to do it, now, but it is not (as far as I can tell) without having to use other services, or multiple services… My iphone and ipad to fine together, but iCloud on my pc, or laptops has never worked, so it is useless…

Anyway… again, maybe I am missing what is already there…

smarterthanuare

To add to your comment, one of the amazing things about Windows 8 is its ability to integrate with other ecosystems. For example, I enter an appointment on my calender on my Motorola Droid Bionic phone. It instantly shows up on both my Windows 8 PC and of course my Nexus 7 tablet. Same goes for contacts. Later if I decide to switch to Windows Phone 8 my contacts on my Gmail account will seamlessly show up on my new phone. No need to set up a Hotmail or Outlook account. Email is the same story on Windows 8. This is one specific area that Google and Apple fall flat in. One question I have is if I have a Windows 8 phone will I be able to send text messages from my desktop Windows 8 PC if I happen to be at home and don’t want to use my phone’s keypad?

Torqueobama

I have an ASUS transformer and a Google Nexus 7, and I vastly prefer the Nexus 7 solely because of the form factor. I’m guessing others will come to that conclusion as well, which begs the question of how Microsoft can compete with a device that is twice as expensive and has comparatively small number of apps.

smarterthanuare

Currently Microsoft is only allowing people that can create awesome apps to develop for Windows 8. Clearly there aren’t very many people that can do this or Microsoft would have a larger number of developers on board. This may change after October 26. Stay tuned.

brenro

I’m more interested in the Core i5 version.

JACrazy

Same but based on the reddit Ama they said its gonna be another 3 months till those come out

tlwest

Well, as an iPad user, I think an aggressively priced, competently designed Surface is just what Apple needs. Thank you Microsoft – may you give the iPad some competition (finally!).

smarterthanuare

Here’s hoping. Then again Android 3.0 was superior in every way to the iPad and hardly anyone bought it. Why? Because of a minor detail. Android 3.0 tablets didn’t have the Apple logo on them. If people are reluctant to buy Android tablets due to a lack of such a minor detail then why would they feel any more comfortable buying a Surface device over an iPad?

cyl2002

One word – Office.
I have already placed my order.

reigouki

After some days of pondering whether RT was worth it, Office was what tipped the scale for me as well. Here’s hoping that they have the other Office programs available to the RT as well at some point.

tlwest

Then again Android 3.0 was superior in every way to the iPad and hardly
anyone bought it. Why? Because of a minor detail. Android 3.0 tablets
didn’t have the Apple logo on them.

Oh dear. It’s lots of fun to support your baseball team, or it’s geek equivalent Android/Apple or Windows/Linux, etc. But there’s a world of difference between being disappointed when your team loses a game, and truly believing that the only conceivable way that your team could lose is that the game is rigged and the refs are incompetent, if not corrupt.

I’m certain there are lots of good things about Android tablets and many that are better than the iPad. But if you truly believe that the only conceivable way that someone might make a different choice from you is that they’re utterly enspelled by a logo, you’ve drunk the kool-aid, dark and deep.

People weigh different factors differently (including weight, battery life, screen quality, industrial design, accessories, friends recommendations, etc – all of which have nothing to do with the OS), and no device is going to superior on all fronts. That people find different things important does not mean that they’re all sheeple. Remember that Apple’s current good fortune hurt you in any real way (unless you shorted Apple :-)), nor does Google’s good fortune actually help you in any real-world way.

In other words, celebrate Android’s victories, live with its defeats, but don’t take today’s ups and downs that seriously, and for goodness sake, don’t get bitter. There’s nothing worse than being the guy in the corner loudly complaining how his team was ripped off.

And who knows, maybe Windows 8 will have that combination of features that happens to allow it to take flight. Neither you nor I (nor Microsoft) know what will tickle the customer’s fancy enough to become a big success.

chojin999

The Microsoft Metro/Modern nonsense failure.
If they priced products at Android levels or lower they might have had a chance… but like this they are just out of mind.
Steve Ballmer is killing Microsoft. The whole Metro thing it’s absolute garbage.
They even put Metro on Windows Server 2012 … it’s a silly joke.
Why should anyone trash all the money spent on Apple iOS apps to switch over to Microsoft on smartphones and tablets?
Microsoft offers nothing better nor nothing cheaper.
And developers hoping to make big bucks being the first ones to release small simple apps for WinPhone8 can’t really expect having big sales with products like these.
Who wants to use Windows OS should first of all forget about Windows8 with the unusable awful childish retarded cheap Metro design.
AmigaOS had a much better GUI than the MetroUI mess.

Additionally, both points I was about to make was also already raised in your link, one by the article and the other by an astute commenter. Microsoft pushed their smart cover pretty hard and perhaps short changed the tablet only option to ensure people get a smart cover with their tablet to minimise the chance of negative criticisms on navigating and using Office and the like on it. I’ve used Quickoffice’s version of Excel which was included on a Samsung Galaxy Tab 10.1 and can honestly say it’s no picnic and sorely missed a keyboard and mouse for most of the things I wanted to do.

And the other raised point was that you had to pick the basic option to choose a different coloured keyboard. While I’m happy with the black, a better structured option would have been to have a sub-choice in colour under the bundled option. That said, it could just be that they already packed the bundled packs with the black cover and didn’t have the time to make packages for different colours given the shipping deadlines.

G Vijai Kumar

The drawback of Apple device is, everything should come from iTunes/iCloud whereas Surface is ready to accept data from any device (Pen drive/blue tooth/Wi-Fi/Cloud/Mobile etc.,)

If somebody wants to watch movie on Apple device should convert the media to .mp4 that’s really pain right?

There is not only MetroUI, Windows 8 also provides rich desktop interface experience and effective apps can be executed side by side.

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